By Phil Wahba
December 11, 2017

Mattel (mat) is not going to have a holly, jolly Christmas.

The toymaker behind such brands as Barbie, Fisher-Price and Fijit Friends said in a regulatory filing on Monday that it expects a poor holiday season, a worrisome admission coming with only two weeks before Christmas. Mattel said in the filing it will likely have to write-down inventory and heavily discount merchandise for the season because of sales now expected to decline by a mid-to-high single digit percentage.

The company has been beset for years by declining sales, market share erosion and changes in the c-suite, including having three CEOs in as many years. And adding insult to injury, Mattel was downgraded by the three major credit rating firms on Monday, when it also filed to raise $1 billion in debt. The company is now below investment grade for S&P Global Ratings, Moody’s and Fitch Ratings. Moody’s lowered its rating on Mattel’s senior unsecured bonds by three notches to a “junk” rating, according to MarketWatch.

Arch-rival Hasbro (has) recently told investors that holiday sales would take a hit this year, pointing to factors such as the recent Toys ‘R’ Us bankruptcy.

Mattel hinted at that in the filing and said it “will continue to be negatively impacted by key retail partners moving toward tighter inventory management.” The company’s problems stand in contrast to the overall toy industry’s good year, with sales are up 3% through the first nine months of the year, according to NPD Group. Many smaller brands have been running away with the prize this year.

As detailed in a recent Fortune magazine profile, Mattel’s new CEO, Margo Georgiadis is looking to shake off the company’s innovation-stifling bureaucracy and introduce more tech. She also wants to drop some smaller, underperforming brands, outsource manufacturing of some toys and cut costs low. But until then, the company, which gets as much 40% of annual sales in the five-week burst between Black Friday and New Year’s, a muffed holiday season is that last thing Mattel needs.

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